Network Appliance's Quantum Leaps

Any healthy, growing company broadens its product line and its customer base over time. It moves up market or down market or adds features to better address new verticals. NetApp is always doing that kind of incremental expansion. But three times now - in our history - we have made quantum leaps to our product line that dramatically broadened the market we serve.

Our acquisitions of Decru (data security through encryption) and Alacritus (disk-based data protection through virtual tape libraries) are part of the third quantum leap. To clarify our strategy, let me first describe the first two quantum leaps, then I'll come back to the third.

NetApp started as a UNIX NAS company. Our first quantum leap was when we expanded ONTAP to support both UNIX and Windows. Today, this seems like a no-brainer, and people expect every NAS product to serve both, but at the time there was a deep gulf between UNIX and Windows. It was a big leap for customers to accept that the same product could be the best Windows NAS as well as the best UNIX NAS. It was a big cultural shift for NetApp employees, as well, since the early ones tended to be UNIX bigots who hated Windows.

The second quantum leap was our expansion into block-based storage - both Fibre Channel and iSCSI. Again it was a big cultural shift, because many of our employees at the time were NAS bigots who argued "NAS is good and SAN is bad." I was the ring-leader, and it took James over a year to help me see the light. Then I spent years converting others. That was almost five years ago, and since then we've moved to the upper right of Gartner's magic quadrant for SAN, farther to the up and right than everyone else except EMC.

The third and current quantum leap is to broaden into heterogeneous data management - to expand beyond features that operate only on NetApp storage and offer products that support non-NetApp storage as well. The Decru Datafort is a perfect example. Sure it'll encrypt NetApp storage, but it'll encrypt EMC, HP, Sun or IBM storage just as well - even StorageTek tapes. Likewise, the VTL (virtual tape library) from Alacritus will support many vendors' storage.

This leap again requires a cultural shift. To be successful, NetApp must partner with storage vendors that we've traditionally competed against. Being buddies with EMC is a mind-shift for NetApp employees on par with embracing Windows back in 1995 or embracing SAN back in 2000. Some have asked, "Why would we give EMC access to Decru's cool technology? Why not lock them out?" The market for Decru is much larger if we can support all storage vendors - that's why. NetApp has about 10% market share in open-system networked storage, so that's another 90% of the market we can go after if we keep Decru heterogeneous. Today, Decru is both an EMC Select Partner and an EMC NAS Partner.

The recent restructuring of our product operations under Tom Georgens and Jay Kidd reflects and supports this new strategy.

Tom G. runs Enterprise Storage Systems, which is our ONTAP-based SAN, iSCSI and NAS storage systems along with all of the homogeneous data management services that support it, like SnapMirror, SnapVault and Data Fabric Manager.

Jay owns all of the heterogeneous data management product lines that support non-NetApp storage as well as NetApp storage. In the same way that EMC structured itself to "wall off" VMware, to allow it to cooperate with EMC's traditional competitors, we are structuring to wall off Decru and Alacritus.

In some ways this is our biggest quantum leap ever. In the past, we always added new capabilities to ONTAP. Now we are broadening our product line beyond ONTAP. In the past we expanded to add new competitors, while keeping existing ones, but now we are converting competitors to partners. (Decru is a reseller partner with EMC.)

I think it's appropriate for a bigger, older NetApp to make bigger leaps.